Correlation Between State Street and Federated Prudent
Can any of the company-specific risk be diversified away by investing in both State Street and Federated Prudent at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining State Street and Federated Prudent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Premier and Federated Prudent Bear, you can compare the effects of market volatilities on State Street and Federated Prudent and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in State Street with a short position of Federated Prudent. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Federated Prudent.
Diversification Opportunities for State Street and Federated Prudent
-0.96 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between State and Federated is -0.96. Overlapping area represents the amount of risk that can be diversified away by holding State Street Premier and Federated Prudent Bear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Prudent Bear and State Street is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on State Street Premier are associated (or correlated) with Federated Prudent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Prudent Bear has no effect on the direction of State Street i.e., State Street and Federated Prudent go up and down completely randomly.
Pair Corralation between State Street and Federated Prudent
Assuming the 90 days horizon State Street Premier is expected to generate 1.23 times more return on investment than Federated Prudent. However, State Street is 1.23 times more volatile than Federated Prudent Bear. It trades about 0.36 of its potential returns per unit of risk. Federated Prudent Bear is currently generating about -0.29 per unit of risk. If you would invest 9,806 in State Street Premier on April 17, 2025 and sell it today you would earn a total of 2,760 from holding State Street Premier or generate 28.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Premier vs. Federated Prudent Bear
Performance |
| Timeline |
| State Street Premier |
| Federated Prudent Bear |
State Street and Federated Prudent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Federated Prudent
The main advantage of trading using opposite State Street and Federated Prudent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Federated Prudent can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Federated Prudent will offset losses from the drop in Federated Prudent's long position.| State Street vs. Fidelity Sai Convertible | State Street vs. Putnam Convertible Securities | State Street vs. Columbia Convertible Securities | State Street vs. Calamos Dynamic Convertible |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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